Watchers in the Old Testament

“When men began to increase on earth and daughters were born to them, the divine beings saw how beautiful the daughters of men were and took wives from among those that pleased them. The LORD said, ‘My breath shall not abide in man forever, since he too is flesh; let the days allowed him be one hundred and twenty years.’ It was then, and later too, that the Nephilim appeared on earth – when the divine beings cohabited with the daughters of men, who bore them offspring. They were the heroes of old, the men of renown.” – Genesis 6:1-4

This is the only account of the watchers in the Bible. Isaiah 14:12-15 talks of the fall of the “day-star, son of morning,” which implies that there was a revolt, and the “day-star” was cast into the abyss, but this may be a reference to early Canaanite or Phoenician myths. One other possible reference is Psalm 82.

God standeth in the Congregation of God (El)
In the midst of gods (elohim) He judgeth
All the foundations of the earth are moved.
I said: Ye are gods,
And all of you sons of the Most High (Elyon)
Nevertheles ye shall die like men,
And fall like one of the princes (sarim)
Psalm 82:1, 5-7

The parts of the Psalm I have left out are the parts that refer to wicked earthly rulers, but it is agreed upon by many scholars that this part of the Psalm refers to the fallen angels. While Genesis 6 tells that angels married women, it does not condemn this as a sin. Psalm 82 tells that the elohim sinned, but does not tell how (i.e. it does not mention that they married women).
Some rabbis have speculated that the angels’ sin was to reproduce. Certain passages in Jewish Midrash talk of how angels are immortal and do not need to reproduce. Since humans are not, they must reproduce in order to achieve immortality in their descendents.